Petroceltic advised that the Italian Minister of Environment, Stafania Prestigiacomo, announced at a conference in Rome that an outline proposed decree to amend the Italian Environmental Code had been adopted by the Council of Ministers that will inter alia prohibit drilling in the Italian seas within 5 miles of the coastline and within 12 miles around the perimeter of protected Marine Parks.
Petroceltic understands that should this restriction be passed into law it will apply to permit applications currently pending and is likely to include Petroceltic's current location for Elsa 2. This well was scheduled to spud in Q4 2010.
Petroceltic are currently seeking further clarification on the process for adopting or rejecting this outline decree and the validity of the application of an immediate restriction to drilling operations.
The Elsa structure straddles the proposed 5 mile restriction and therefore Petroceltic are considering alternative well locations on the structure which are outside of the proposed 5 mile boundary. Petroceltic intend to continue with the existing environmental permitting process, which is at an advanced stage, whilst the implications of the proposed restrictions are assessed.
Should the proposed change to the Environmental Code come into force Petroceltic intends to seek agreement from the Ministry of Industry to suspend any licence timing obligations in order to extend the well spud deadline.
The Elsa field was discovered in 1992 by AGIP with the drilling of the Elsa-1 well which encountered an oil column of 65 meters in the Lower Cretaceous Maiolica Formation at a depth of approximately 4,500 meters. A TRACS Competent Person's Report on the Elsa field published in March 2010 estimated the
most likely recoverable oil reserves to be in the region of 100 MMbbl, depending on oil gravity and viscosity.
Brian O'Cathain, Chief Executive of Petroceltic, commented, "We are keenly aware of the environmental concerns associated with drilling in the Abbruzo region and have been diligent in communicating to stakeholders our plans to mitigate environmental risks when drilling the Elsa 2 well. This has been done through the official permitting and consultation process and additionally through a voluntary supplemental communication initiative. We are committed to maintaining this partnership approach in the months ahead."
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